CFE Ready for Competition in New-Look Market

Speaker: Jaime Hernández, Director General of CFE

Mexico’s state-owned electric utility CFE is preparing itself to compete in the market on equal terms with private players as a generator and supplier for the market, even on renewable sources like solar and geothermal, Jaime Hernández, the company’s Director General, said on Wednesday during remarks to close Mexico Energy Forum 2017 at Mexico City’s Sheraton Maria Isabel.

“In this new competitive environment, CFE has the tools to compete successfully in Mexico,” Hernández said. One of the main challenges ahead for the state-owned productive company is to complete the separation of its six different generation subsidiaries as well as its distribution, transmission and supply units, the executive added.

“We want to reach one goal. To continue offering Mexicans a higher quality electricity service at competitive prices and with more environmentally friendly processes,” Hernández said. One of the objectives to achieve that, he mentioned, is the continued reduction of power losses, including widespread energy theft, currently around 12.4 percent per year versus an average for Mexico’s partners in the Organization for Economic Cooperation and Development (OECD) of around 6 percent. Also, the company expects to report results in the black in 2016, the first such results in years.

CFE is also looking to attract private capital to help develop its subsidiaries to better compete with each other and the private sector, with an endgame to become profitable in the mid-term. The company is looking for public and private resources to promote an investment program close to MX$250 billion (US$12.3 billion), he added.

Answering a question from the audience, Hernández clarified that Mexico’s sole nuclear power plant, Laguna Verde in Veracruz, with some of the lowest production costs in the country, has been assigned to basic power supply (the subsidized supply for small users) to avoid competition with other companies on qualified supply.